When you are first breaking into the rental property market, it can sometimes be difficult to navigate around the costs, deductions, taxes and all the other things you need to consider when doing the books.

And while it is probably a good idea to have an accountant assist you at year end, here are the five most important ones you should be claiming on your rental property. 

1. Rates and insurance

Depending on where you live in the country, you need to be mindful of the rates which you are required to pay.

In most regions in New Zealand, you pay rates to both the city council and the provincial district council, however in Auckland, you only pay rates to the Auckland Council. Rates are normally amongst the highest expenses on a rental property, so make sure you claim them.

And don’t forget about that insurance too – it really is a must for any property owner, especially when someone else is living in the home, so be covered, and know you can claim tax back on it as well.

Read more: How to maximise the rental return on your property

2. Interest 

If your sole intent is to borrow money for the rental property, you are able to claim the mortgage interest as an expense. But if the loan is split between a couple of things (the mortgage on your own home as well as the investment) then you can only claim on the portion that is attributed to the rental property.

3. Repairs and maintenance

To be at its absolute best, your rental property will require ongoing maintenance and repairs in general. And whether you do the work yourself or hire somebody else to do it, you are able to deduct the costs as an expense (but note that you can’t claim your own personal time as a cost, only the materials).

This could be anything from fixing the exterior cladding, re carpeting, repainting the house or fixing the water pipes. However, there is a difference between repair work and general improvements (which you can’t claim on). If you’re unsure – ask your accountant or the IRD.

4. Fees

There are quite a few fees you can claim on, so make sure you keep a record of them all. If you are paying a property manager to collect rent, find tenants and maintain the property for you, you can claim their fees and/or commission.

You can also claim on any legal fees that come from the sale or purchase of a rental property, and don’t forget about your accountant – although you are unable to claim the costs involved with setting up your rental property.

Here are a few other one-off expenses you can also look to claim on:

• Arranging a mortgage to finance the rental property
• Drawing up a tenancy agreement
• Ongoing administration costs for the mortgage
• Getting a valuation required to obtain a mortgage. (A valuation acquired for insurance purposes isn't deductible)
• Taking legal action to recover unpaid rent
• Evicting a tenant.

5. Motor vehicle and travel expenses

If you use your private motor vehicle to do property inspections, and conduct maintenance on your rental property, you are able to claim this as an expense in one of two ways: mileage rates (as supplied by the IRD) or a percentage of the total running costs and depreciation.

You are also able to claim travel costs if you reside in a different location to your rental property.

Want to make sure you avoid having dodgy tenants move into your rental? Check out our FREE guide: